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    Fed Officials’ Trading Draws Outcry, and Fuels Calls for Accountability

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    Central bank regional presidents traded securities in markets in which Fed choices mattered in 2020. Here’s why critics find that troubling.Federal Reserve officials traded stocks and other securities in 2020, a year in which the central bank took emergency steps to prop up financial markets and prevent their collapse — raising questions about whether the Fed’s ethics standards have become too lax as its role has vastly expanded.The trades appeared to be legal and in compliance with Fed rules. Million-dollar stock transactions from the Dallas Fed president, Robert S. Kaplan, have drawn particular attention, but none took place when the central bank was most actively backstopping financial markets in late March and April.However, the mere possibility that Fed officials might be able to financially benefit from information they learn through their positions has prompted criticism of perceived shortcomings in the institution’s ethics rules, which were forged decades ago and are now struggling to keep up with the central bank’s 21st century function.“What we have now is an ethics system built on a very narrow conception of what a central bank is and should be,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania.On Thursday, Mr. Kaplan and Eric Rosengren, president of the Federal Reserve Bank of Boston, said they would sell all the individual stocks they own by Sept. 30 and move their financial holdings into passive investments.“While my financial transactions conducted during my years as Dallas Fed president have complied with the Federal Reserve’s ethics rules, to avoid even the appearance of any conflict of interest, I have decided to change my personal investment practices,” Mr. Kaplan said in a statement. He added that “there will be no trading in these accounts as long as I am serving as president of the Dallas Fed.”Mr. Rosengren, who had drawn criticism for trading in securities tied to real estate, also said he would divest his stock holdings and expressed regret about the perception of his transactions.“I made some personal investment decisions last year that were permissible under Fed ethics rules,” he said in a statement. “Regrettably, the appearance of such permissible personal investment decisions has generated some questions, so I have made the decision to divest these assets to underscore my commitment to Fed ethics guidelines. It is extremely important to me to avoid even the appearance of a conflict of interest, and I believe these steps will achieve that.”It was unclear on Thursday evening whether those moves would be enough to stop the groundswell of criticism as economists, academics and former employees asked why Fed officials are allowed to invest so broadly.The Fed has gone from serving as a lender of last resort mostly to banks to, at extreme moments in both 2008 and 2020, using its tools to rescue large swaths of the financial system. That includes propping up the market for short-term corporate debt during the Great Recession and backstopping long-term company debt and enabling loans to Main Street businesses during the 2020 pandemic crisis.That role has helped to make the Fed and its officials privy to information affecting every corner of finance.Yet central bankers can still actively buy and sell most stocks and some types of bonds, subject to some limitations. They have long been barred from owning and trading the securities of supervised banks, in a nod to the Fed’s pivotal role in bank oversight, but those clear-cut restrictions have not widened alongside the Fed’s influence.“Just as there is a set of rules for bank stocks, why not look to see if it is valuable to expand that to other assets that are directly affected by Fed policy?” said Roberto Perli at Cornerstone Macro, a former Fed Board employee himself. “There are plenty of people out there who think the Fed does nefarious things, and these headlines may contribute to that perception.”The 2020 batch of disclosures has received extra attention because the Fed spent last year unveiling never-before-attempted programs to save a broad array of financial markets from pandemic fallout. Regional Fed presidents like Mr. Kaplan did not vote on the backstops, but they were regularly consulted on their design.Critics said that raised the possibility — and risked creating the perception — that Fed presidents had access to information that could have benefited their personal trading.Mr. Kaplan made nearly two dozen stock trades of $1 million or more last year, a fact first reported by The Wall Street Journal. Those included transactions in companies whose stocks were affected by the pandemic — such as Johnson & Johnson and several oil and gas companies — and in firms whose bonds the Fed eventually bought in its broad-based program.None of those transactions took place between late March and May 1, a Fed official said, which would have curbed Mr. Kaplan’s ability to use information about the coming rescue programs to earn a profit.But the trades drew attention for other reasons. Mr. Conti-Brown pointed out that Mr. Kaplan was buying and selling oil company shares just as the Fed was debating what role it should play in regulating climate-related finance. And everything the Fed did in 2020 — like slashing rates to near zero and buying trillions in government-backed debt — affected the stock market, sending equity prices higher.“It’s really bad for the Fed, people are going to seize on it to say that the Fed is self-dealing,” said Sam Bell, a founder of Employ America, a group focused on economic policy. “Here’s a guy who influences monetary policy, and he’s making money for himself in the stock market.”Mr. Perli noted that Mr. Kaplan’s financial activity included trading in a corporate bond exchange-traded fund, which is effectively a bundle of company debt that trades like a stock. The Fed bought shares in that type of fund last year.Other key policymakers, including the New York Fed president, John C. Williams, reported much less financial activity in 2020, based on disclosures published or provided by their reserve banks. Mr. Williams told reporters on a call on Wednesday that he thought transparency measures around trading activity were critical.“If you’re asking should those policies be reviewed or changed, I think that’s a broader question that I don’t have a particular answer for right now,” Mr. Williams said.Washington-based board officials reported some financial activity, but it was more limited. Jerome H. Powell, the Fed chair, reported 41 recorded transactions made by him or on his or his family’s behalf in 2020, but those were typically in index funds and other relatively broad investment strategies. Randal K. Quarles, the Fed’s vice chair for supervision, recorded purchases and sales of Union Pacific stock last summer. Those stocks were assets of Mr. Quarles’s wife and he had no involvement in the transactions, a Fed spokesman said.The Fed system is made up of a seven-seat board in Washington and 12 regional reserve banks. Board members — called governors — are politically appointed and answer to Congress. Regional officials — called presidents — are appointed by their boards of directors and confirmed by the Federal Reserve Board, and they do not answer to the public directly. Regional branches are chartered as corporations, rather than set up as government entities.The most noteworthy 2020 transactions happened at the less-accountable regional banks, which could call attention to Fed governance, said Sarah Binder, a political scientist at George Washington University and the author of a book on the politics of the Fed.“It highlights the crazy, weird, Byzantine nature of the Fed,” Ms. Binder said. “It’s just almost impossible to keep the rules straight, the lines of accountability straight.”The board and the regional banks abide by generally similar ethics agreements. Employees are prohibited from using nonpublic information for gain. Officials cannot trade in the days around Fed meetings and face 30-day holding periods for many securities. Regional banks have their own ethics officers who regularly consult with ethics officials at the Fed’s Board, and presidents and governors alike disclose their financial activity annually.Even with Mr. Kaplan and Mr. Rosengren’s individual responses, pressure could grow for the Fed to adopt more stringent rules, recognizing the special role the central bank plays in markets. That could include requiring officials to invest in broad indexes. The Fed could also apply stricter limits to how much officials can change their investment portfolios while in office, or expand formal limitations to ban trading in a broader list of Fed-sensitive securities, legal experts and former Fed employees suggested in interviews.Fed-related financial activity has drawn other negative attention recently. Janet L. Yellen, the former central bank chair, faced criticism when financial documents filed as part of her nomination for Treasury secretary showed that she had received more than $7 million in bank and corporate speaking fees in 2019 and 2020, after leaving her top central bank role.The Federal Reserve Act limits governors’ abilities to go straight to bank payrolls if they leave before their terms lapse, but speaking fees from the finance industry are permitted.Defenders of the status quo sometimes argue that the Fed would struggle to attract top talent if it curbed how much current and former officials can participate in markets and the financial industry. They could face big tax bills if they had to turn financial holdings into cash upon starting central bank jobs. Because Fed officials tend to have financial backgrounds, banning financial sector work after they leave government could limit their options.But few if any argue that former officials would command such large speaking fees if they had never held central bank leadership positions. And it is widely accepted that the ability to trade while in office as a Fed president raises issues of perception.“People will ask, fairly or otherwise, about the extent to which his views about the balance sheet are interest rates are influenced by his personal investments in the stock market,” Ms. Binder said of Mr. Kaplan’s trades, speaking before his Thursday announcement. “That is not good for the Fed.” More

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    U.S. Debt Default Could Come in October, Yellen Warns

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    WASHINGTON — The United States could default on its debt sometime in October if Congress does not take action to raise or suspend the debt limit, Treasury Secretary Janet L. Yellen warned on Wednesday.The “extraordinary measures” that the Treasury Department has been employing to finance the government on a temporary basis since Aug. 1 will be exhausted next month, Ms. Yellen said in a letter to lawmakers. She added that the exact timing remained unclear but that time to avert an economic catastrophe was running out.“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Ms. Yellen wrote.To delay a default, Treasury has in the last month suspended investments in the Civil Service Retirement and Disability Fund, the Postal Service Retiree Health Benefits Fund and the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan.The distribution of pandemic relief payments this year and uncertainty over incoming tax payments this month have made it more challenging than usual to predict when funds will run out. Ms. Yellen said that a default would cause “irreparable harm” to the U.S. economy and to global financial markets and that even coming close to defaulting could be harmful.“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers and negatively impact the credit rating of the United States,” she wrote.Democratic leaders have been insisting for months that Republicans join them in raising the debt ceiling, saying the government hit its last debt limit because of the spending and tax cutting of the Trump administration, what Speaker Nancy Pelosi of California on Wednesday called “the Trump credit card.”But Senator Mitch McConnell of Kentucky, the Republican leader, has been just as emphatic that he will keep Senate Republicans from helping Democrats on the issue. Democrats may try to attach the increase to measures such as an emergency spending bill to pay for relief and reconstruction after Hurricane Ida, wildfires and heat waves from the summer — daring senators from Louisiana and Western states to vote no.The showdown has again put the parties into a game of chicken, with a debt default and potential economic crisis as the consequence.Ms. Pelosi, at her weekly news conference on Wednesday, said emphatically that Democrats would not include a statutory increase in the government’s borrowing authority in a budget bill being drafted this month. That bill, under complicated budget rules, could pass without Republican votes in the Senate.Instead, Democratic leaders will dare Senate Republicans to filibuster a bill that does raise the debt ceiling.“We Democrats supported lifting the debt ceiling” during the Trump administration, she said, “because it was the responsible thing to do.” She added, “I would hope that the Republicans would act in a similarly responsible way.”Democrats have several options they are considering. The government will run out of operating funds at the end of the month, so a debt ceiling increase could be attached to a stopgap spending measure — meaning a Republican filibuster would not only jeopardize the government’s full faith and credit, it could shut down the government.Democrats could also attach it to a major infrastructure bill that passed the Senate with bipartisan support and is supposed to get a House vote by Sept. 27. More

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    When Will Unemployment End? Biden Urges Some States to Extend Benefits

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    President Biden is encouraging states with stubbornly high jobless rates to use federal aid dollars to extend benefits for unemployed workers after they are set to expire in early September, administration officials said on Thursday, in an effort to cushion a potential shock to some local economies as the Delta variant of the coronavirus rattles the country.Enhanced benefits for unemployed workers will run through Sept. 6 under the $1.9 trillion economic aid bill enacted in March. Those benefits include a $300 weekly supplement for traditional benefits paid by states, additional weeks of benefits for the long-term unemployed and a special pandemic program meant to help so-called gig-economy workers who do not qualify for normal unemployment benefits. Those benefits are administered by states but paid for by the federal government. The bill also included $350 billion in relief funds for state, local and tribal governments.Mr. Biden still believes it is appropriate for the $300 benefit to expire on schedule, as it was “always intended to be temporary,” the secretaries of the Treasury and labor said in a letter to Democratic committee chairmen in the House and Senate on Thursday. But they also reiterated that the stimulus bill allows states to use their relief funds to prolong other parts of the expanded benefits, like the additional weeks for the long-term unemployed, and they called on states to do so if their economies still need the help.That group could include California, New York and Nevada, where unemployment rates remain well above the national average and governors have not moved to pare back benefits in response to concerns that they may be making it more difficult for businesses to hire.“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” wrote Janet L. Yellen, the Treasury secretary, and Martin J. Walsh, the labor secretary. “The Delta variant may also pose short-term challenges to local economies and labor markets.”The additional unemployment benefits have helped boost consumer spending in the recovery from recession, even as the labor market remains millions of jobs short of its prepandemic levels. But business owners and Republican lawmakers have blamed the $300 supplement, in particular, for the difficulties that retailers, restaurants and other employers have faced in filling jobs this spring and summer.Two dozen states, mostly led by Republicans, have moved to end at least some of the benefits before their expiration date.In their letter to Congress, the administration officials said the Labor Department was announcing $47 million in new grants meant to help displaced workers connect with good jobs. They also reiterated Mr. Biden’s call for Congress to include a long-term fix for problems with the unemployment system in a large spending bill that Democrats are trying to move as part of their multipart economic agenda. More

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    Janet Yellen Gets a Chance to Shape the Fed, This Time From Outside

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    As Jerome H. Powell nears the end of his term as Federal Reserve chair, Ms. Yellen will have a say over whether he should stay on. Many progressive Democrats want him replaced.Janet L. Yellen has dedicated most of her professional life to the Federal Reserve. She served in its highest-ranking roles, including as president of the Federal Reserve Bank of San Francisco, on its Washington-based board and as the central bank’s first female chair. When President Donald J. Trump decided to replace her in that role in 2017, she was sorely disappointed.Now, as Treasury secretary, Ms. Yellen is getting another chance to shape the future of the institution. She will be a critical voice in deciding who ought to lead the central bank in what some see as a once-in-a-generation opportunity to remake an institution that shepherds America’s economy and helps to regulate its largest banks.Jerome H. Powell’s term as chair, which began in 2018 after Mr. Trump picked him to take over for Ms. Yellen, ends in February. Slots for the vice chair and the Fed’s top bank regulator will also be up for grabs soon, and a position on the Fed’s Board of Governors is already vacant. Assuming officials leave once their leadership terms end, the Biden administration may, in quick succession, be able to appoint four of the Fed’s seven board members, powerful policymakers who have constant votes on monetary decisions and exclusive regulatory authorities.Many progressive Democrats are pushing to oust the moderate Mr. Powell and replace him with a candidate who is focused on tight financial regulation, climate change and digital money — most likely the Fed governor Lael Brainard. Mr. Powell’s supporters see him as a champion for full employment, and would like him to be retained as a sign that competent leadership is rewarded.It’s unclear where Ms. Yellen’s preferences lie, but it’s common knowledge that she was unhappy when Mr. Trump broke a tradition of reappointment in her case.Many who would like to see Mr. Powell replaced play down the role she will have in shaping President Biden’s decision. But Treasury secretaries have traditionally been central to the Fed selection process, helping to advise and guide the president toward a choice that will be welcome on both Wall Street and in the Senate, which has to confirm nominees to the Fed board.Ms. Yellen’s views will carry significant weight in the deliberations, coloring both who is considered and the ultimate outcome. Discussions over the pick are also being held among Brian Deese, director of the National Economic Council; Ron Klain, the president’s chief of staff; and Cecilia Rouse, chair of the Council of Economic Advisers, according to people familiar with the deliberations. Mr. Biden will have the final word.Conversations over who should lead the institution could stretch into October, as they have in past Fed leadership decisions. But speculation over who will win the top jobs is already rampant.The Treasury Department declined to comment.The argument for replacing Mr. Powell, a Republican who was appointed as a Fed governor by President Barack Obama, has to do with things other than traditional interest rate policy. Democrats typically say he has done a relatively good job when it comes to guiding the economy using monetary tools.Under Mr. Powell’s leadership, the Fed parried Mr. Trump’s pressure campaign to lower rates when the economic backdrop was solid, and it reacted rapidly and effectively to the economic collapse triggered by the pandemic. The Fed is also credited with averting a financial crisis early last year as key markets seized. Mr. Powell’s Fed revamped its entire policy framework last year to focus more concertedly on achieving a strong job market that extends its benefits to as many people as possible.Jerome H. Powell has been Fed chair since 2018; his term ends in February.Sarahbeth Maney/The New York TimesMs. Yellen has repeatedly praised Mr. Powell’s performance.“He’s doing extremely well,” she told The New York Times in early 2020, discussing Mr. Powell’s conduct as he came under attack from the Trump White House.But Mr. Powell has opponents among more progressive groups. He often deferred to the Fed’s vice chair — a Trump appointee — for supervision when it came to regulation, regularly voting for tweaks to bank and financial rules that chipped quietly away at postcrisis financial reforms. He has also been criticized by climate focused groups for being too slow to elevate the Fed’s role in policing environment-related finance. Climate activists plan to protest at the Fed’s annual symposium this year in Jackson, Wyo., and Mr. Powell “will be a key target,” Thanu Yakupitiyage, head of U.S. communications at 350.org, said in an email. The group is one of the protest’s key organizers.Regulation and climate are key reasons some Democrats are lining up behind Ms. Brainard, the Fed governor and another leading candidate. Ms. Brainard, who also has a good relationship with Ms. Yellen, opposed Trump administration efforts to lighten bank oversight by loudly dissenting against a spate of regulatory decisions, often releasing meticulous statements detailing where they went awry.She is seen as a powerful and effective Fed governor, one who played a key role in shaping pandemic response programs. And while they are closely aligned on monetary policy, she has distinguished herself from Mr. Powell by pushing for a bigger role for the Fed on climate issues and a more proactive stance toward developing a digital currency.She also could help to anchor a leadership team that could usher in a fresh era for the Fed, her supporters argue.Andrew Levin, a former Fed economist, is one of several people who are pushing the idea that the White House appoint Ms. Brainard as chair and Sarah Bloom Raskin, a former top Fed and Treasury official, to the central bank’s top regulatory job. Mr. Levin, now a professor of economics at Dartmouth, would also favor nominating as vice chair Lisa Cook, a professor from Michigan State University who has researched racial disparities and labor markets and has worked to improve diversity in economics.That group would be diverse, compared with the Fed’s typically white and male leadership team. The Fed has been led by a woman — Ms. Yellen — for just four of its nearly 108 years. If appointed vice chair, Ms. Cook would be the highest-ranking Black woman in its history.“It’s a package deal that should work together,” Mr. Levin said. “This administration wants to send a message that they care about all of the people who are slipping through the cracks.”Those aren’t the only names floated for key positions. William Spriggs, chief economist at the A.F.L.-C.I.O. (and himself a fan of keeping Mr. Powell in the top job), is also on some lists for the vice chair or a governor.Progressive Democrats are lining up behind Lael Brainard, a Federal Reserve governor.Cliff Owen/Associated PressProgressive groups have been talking to lawmakers, arguing that Mr. Powell should be replaced, and key Democrats are sympathetic to some of their arguments.“My concern is that over and over, he has weakened the regulation here, he has led the Fed to ease up there,” Senator Elizabeth Warren, Democrat from Massachusetts, said on Bloomberg TV this month. “We need someone who understands and uses both the monetary policy tools and the regulatory tools to keep our economy safe.”But whether such objections will kill Mr. Powell’s chances remains to be seen. Powerful Democrats attuned to the issue, such as Senator Sherrod Brown of Ohio, have not signaled definitively that they would vote against Mr. Powell were he renominated. Even if Mr. Powell is retained, fresh faces in the other key jobs could inject diversity and expertise on issues like climate and financial oversight into the Fed’s top ranks.And another argument is working in Mr. Powell’s favor: tradition.When Mr. Trump replaced Ms. Yellen, he bucked a longstanding practice in which Fed chairs were reappointed if they had done a good job, regardless of their political background. The tradition is in part a nod to the fact that the Fed is meant to be independent of partisan politics.Democrats and their allies were infuriated.The decision was “seemingly rooted in simple-minded partisanship that demanded a Republican president replace a Democratic appointee as Fed chair,” Josh Bivens, research director at the typically liberal Economic Policy Institute, wrote in a statement at the time. “This decision breaks a longstanding norm of not elevating partisanship over competence when picking Fed chairs.”Mr. Bivens, in an email last week, said that the norm “is pretty broken,” but that the decision to replace a Fed chair should still come down to whether the incumbent had done a good job. There’s a strong case for keeping Mr. Powell based on his monetary policymaking at a moment of fierce debate over the Fed’s policy direction, he thinks.Ms. Yellen remains mindful of the tradition. She reacted sadly in 2018 to Mr. Trump’s decision to replace her, saying during a CBS News interview that she had made it clear she would have stayed on and felt a “sense of disappointment.”“It is common for people to be reappointed by presidents of the opposite party,” she said. More

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    Pelosi and Yellen to Discuss Rental Assistance as Eviction Crisis Looms

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    WASHINGTON — The Biden administration on Tuesday imposed a new, 60-day federal moratorium on evictions in areas of the country ravaged by the Delta variant, a move aimed at protecting hundreds of thousands of renters at risk of being kicked out of their homes during a pandemic.The action was also intended to quell a rebellion among angry Democrats who blamed the White House for allowing a previous eviction ban to expire on Saturday — after the Democratic-controlled House was unable to muster enough votes to extend that moratorium.President Biden told reporters that the Centers for Disease Control and Prevention would seek to implement a new federal moratorium on evictions in communities across the country hardest hit by the virus.Tom Brenner for The New York TimesPresident Biden has been under intense pressure from activists and allies for the last week to protect people at risk of being driven from their homes for failing to pay their rent during the economic crisis brought on by the pandemic. The previous nationwide moratorium on evictions, which went into effect in September, expired on Saturday after the Supreme Court warned that an extension would require congressional action.The end of the rental protections has prompted a flurry of recriminations in Washington and a furious effort by the White House to find a solution that prevents working-class and impoverished Americans from being evicted from their homes on Mr. Biden’s watch as billions in aid allocated by Congress goes untapped.The Centers for Disease Control and Prevention late Tuesday announced the new order barring people from being driven out of their homes in many parts of the country, saying that “the evictions of tenants for failure to make rent or housing payments could be detrimental to public health control measures” aimed at slowing Covid-19.The order will expire on Oct. 3, the C.D.C. said, and applies to areas of the country “experiencing substantial and high levels of community transmission” of the virus. Mr. Biden, in remarks ahead of the official order, said the moratorium was expected to reach 90 percent of Americans who are renters.“This moratorium is the right thing to do to keep people in their homes and out of congregate settings where Covid-19 spreads,” Dr. Rochelle P. Walensky, the director of the C.D.C., said in a statement. “Such mass evictions and the attendant public health consequences would be very difficult to reverse.”The decision to impose a new and targeted moratorium, rather than extending the previous national ban, is aimed at sidestepping a Supreme Court ruling from late June that seemed to limit the administration’s ability to enact such policies. While the court upheld the C.D.C.’s moratorium, Justice Brett M. Kavanaugh issued a brief concurring opinion explaining that he had cast his vote reluctantly and believed the C.D.C. had “exceeded its existing statutory authority by issuing a nationwide eviction moratorium.”Mr. Biden conceded on Tuesday that the new approach might be struck down by the courts as executive overreach. But he suggested the move could help buy the administration time as it tried to get states to disburse billions of dollars of aid to help renters meet their obligations to landlords.Congress previously allocated $46.5 billion in rental assistance in two coronavirus relief packages, but only about $3 billion had been delivered to eligible households through June, according to Treasury Department data.“Whether that option will pass constitutional measure with this administration, I can’t tell you. I don’t know,” Mr. Biden said of a new moratorium. “There are a few scholars who say it will and others who say it’s not likely to. But at a minimum, by the time it gets litigated, we’ll probably give some additional time while we’re getting that $45 billion out to people who are in fact behind in rent and don’t have the money.”For days, some of Mr. Biden’s closest allies on Capitol Hill, including some of the most progressive Democrats in Congress, have been publicly and privately assailing his lack of action to help renters, accusing the president and his aides of failing to find a replacement for the eviction moratorium until it was too late.Just days before Saturday’s expiration of the ban, Mr. Biden called on Congress to pass legislation to extend it. But with the House about to leave town for a seven-week vacation and Republicans solidly opposed to an extension, progressive Democrats described the White House call as a cynical attempt to shift blame to lawmakers. The administration, for its part, feared that any unilateral move would open the White House to legal challenges that could ultimately erode Mr. Biden’s presidential powers.The expiration presented the president with a thorny choice: Side with the C.D.C. and his own lawyers, who saw an extension as a dangerous step that could limit executive authority during health crises, or heed the demands of his party’s progressive wing to take immediate action to halt what they saw as a preventable housing crisis.Under intense pressure from Speaker Nancy Pelosi and other Democrats, Mr. Biden’s team opted for an approach that would give them a chance to satisfy both camps, creating a new moratorium, based on a recent rise in infections from the Delta variant, that cited the risks associated with the movement of displaced tenants in areas where the virus is raging.But ultimately it came down to a simpler calculation: Mr. Biden could not ignore the call, led by Black Democrats, to reverse course.“Every single day that we wait, thousands of people are receiving eviction notices, and some of them are being put out on the street,” said Representative Cori Bush, Democrat of Missouri, who has been sleeping on the steps of the Capitol since the moratorium expired in a bid to pressure her party’s leadership. “People started sending me pictures of dockets, court dockets, that were all evictions. We cannot continue to sit back. We need this done today.”Ms. Pelosi and Senator Chuck Schumer, Democrat of New York and the majority leader, were briefed on Tuesday on the C.D.C.’s plan by Dr. Walensky, the agency’s director, and Xavier Becerra, the secretary of health and human services, according to a person familiar with the call. Ms. Pelosi hailed the idea of a new eviction moratorium as a victory for many Americans who were struggling because of the pandemic.“Today is a day of extraordinary relief,” she said in a statement. “Thanks to the leadership of President Biden, the imminent fear of eviction and being put out on the street has been lifted for countless families across America. Help is here!”Yet for two days it was unclear how — or whether — any help would arrive as landlords prepared to turn to housing courts to evict tenants who were behind on their rent.At a White House meeting with Mr. Biden on Friday, Ms. Pelosi and Mr. Schumer bluntly informed Mr. Biden they did not have the votes to pass an extension — and pressed him to take whatever action he could using his executive power, according to two Democratic congressional aides briefed on the meeting.On Tuesday, House Democrats summoned Treasury Secretary Janet L. Yellen to explain what the agency was doing to help struggling renters. In a private call between Democrats and Ms. Yellen, the Treasury secretary insisted that her team was using all available tools to get rental assistance money to states and to help governments distribute those funds to landlords and renters.“I thoroughly agree we need to bring every resource to bear,” Ms. Yellen said, according to a person who was on the call.The White House had been scrambling to figure out exactly what its legal options were for continuing the moratorium. On Monday, Jen Psaki, the White House press secretary, said that Mr. Biden had asked the C.D.C. on Sunday to consider extending the moratorium for 30 days, even just to high-risk states, but that the C.D.C. had “been unable to find legal authority for a new, targeted eviction moratorium.”A day later, however, the administration appeared ready to barrel through legal challenges and embrace a solution that did just that.The extension is likely to intensify a legal fight with landlord groups that have argued that the eviction ban has saddled them with debt.The National Apartment Association, which filed a lawsuit last week seeking to recoup lost rent, said the moratorium was jeopardizing the viability of the housing market. The group estimates that the apartment industry is shouldering $26.6 billion in debt as a result of the eviction ban.“The government has intruded into private property and constitutional freedoms, and we are proudly fighting to make owners whole and ensure residents’ debt is wiped from their record,” said Robert Pinnegar, the chief executive of the association.Legal experts said it was likely that the administration would face a new wave of lawsuits if the justification and structure of a new moratorium was similar to the one that had been in place.“The only logic by which this could be justified is a logic that would enable them to be able to suppress virtually any activity of any kind that they can claim might spread contagious disease,” said Ilya Somin, a law professor at George Mason University. More

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    Yellen Says China Trade Deal Has ‘Hurt American Consumers’

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    The Treasury secretary said an agreement made by the Trump administration, which remains under review, had failed to address fundamental problems between the two countries.WASHINGTON — Treasury Secretary Janet L. Yellen has cast doubt on the merits of the trade agreement between the United States and China, arguing that it has failed to address the most pressing disputes between the world’s two largest economies and warning that the tariffs that remain in place have harmed American consumers.Ms. Yellen’s comments, in an interview with The New York Times this week, come as the Biden administration is seven months into an extensive review of America’s economic relationship with China. The review must answer the central question of what to do about the deal that former President Donald J. Trump signed in early 2020 that included Chinese commitments to buy American products and change its trade practices.Tariffs that remain on $360 billion of Chinese imports are hanging in the balance, and the Biden administration has said little about the deal’s fate. Trump administration officials tried to create tariffs that would shelter key American industries like car making and aircraft manufacturing from what they described as subsidized Chinese exports.But Ms. Yellen questioned whether the tariffs had been well designed. “My own personal view is that tariffs were not put in place on China in a way that was very thoughtful with respect to where there are problems and what is the U.S. interest,” she said at the conclusion of a weeklong trip to Europe.President Biden has not moved to roll back the tariffs, but Ms. Yellen suggested that they were not helping the economy.“Tariffs are taxes on consumers. In some cases it seems to me what we did hurt American consumers, and the type of deal that the prior administration negotiated really didn’t address in many ways the fundamental problems we have with China,” she said.But reaching any new deal could be hard given rising tensions between the two countries on other issues. The Biden administration warned U.S. businesses in Hong Kong on Friday about the risks of doing business there, including the possibility of electronic surveillance and the surrender of customer data to the authorities.Chinese officials would welcome any unilateral American move to dismantle tariffs, according to two people involved in Chinese policymaking. But China is not willing to halt its broad industrial subsidies in exchange for a tariff deal, they said.Xi Jinping, China’s top leader, has sought technological self-reliance for his country and the creation of millions of well-paid jobs through government assistance to Chinese manufacturers of electric cars, commercial aircraft, semiconductors and other products.It might be possible to make some adjustments at the margins of these policies, but China is not willing to abandon its ambitions, said both people, who spoke on the condition of anonymity because they were not authorized to discuss the issue publicly.Academic experts in China share the government’s skepticism that any quick deal can be achieved.“Even if we go back to the negotiating table, it will be tough to reach an agreement,” said George Yu, a trade economist at Renmin University in Beijing.The Trump administration also sought, without success, to persuade Chinese officials to abandon heavy subsidies for high-tech industries. Robert E. Lighthizer, Mr. Trump’s trade representative, ended up imposing tariffs aimed at preventing subsidized Chinese companies from driving American companies out of business.Getting China to Buy American MadeThe United States and China named last year’s pact the Phase 1 agreement, and promised to negotiate a second phase. But that never happened.The tariffs have played a particularly large role in the auto industry.In response to Mr. Trump’s 25 percent tariff on imported gasoline-powered and electric cars from China, American automakers like Ford Motor have abandoned plans to import inexpensive cars from their Chinese factories. Chinese automakers like Guangzhou Auto have also shelved plans to enter the American market.Chinese car exports have surged this spring as new factories come into production, many of them built with extensive subsidies. But the inexpensive Chinese cars have mainly gone elsewhere in Asia and to Europe, even as car prices in the United States have climbed.Ms. Yellen did not specifically address automotive tariffs.The first phase of the trade deal included a requirement for a high-level review this summer. The agreement requires China to stop forcing foreign firms to transfer their technology to Chinese companies doing business there.Phase 1 also included a Chinese pledge to buy an additional $200 billion of American goods and services through the end of this year. The agreement was intended to make sure that China did not retaliate for American tariffs by discouraging Chinese companies from buying American goods.Although China has resumed large-scale purchases of U.S. goods since the countries’ trade war, neither the overall value of these purchases nor the composition of purchases has met the Trump administration’s hopes.China fell short of its commitments by 40 percent last year and is off by more than 30 percent so far this year, said Chad P. Bown of the Peterson Institute for International Economics, who has been tracking the purchases. The pace of agricultural purchases has picked up, but China is not buying enough cars, airplanes or other products made in the United States to meet its obligations.China also pledged in the Phase 1 agreement that its purchases of American goods would continue rising from 2022 through 2025.Biden’s Blended ApproachThe Biden administration is cognizant that all of these purchase requirements have frustrated American allies who feel that the agreement has cost them sales.One reason China is not eager to reopen potentially acrimonious negotiations over American tariffs and Chinese subsidies is that the Phase 1 agreement has transformed trade relations between the two countries, said the people familiar with Chinese economic policymaking. Trade has gone from being one of their biggest sources of friction to becoming one of the least contentious areas of their relationship.Under Mr. Biden, the United States has maintained pressure on China and in some respects stepped it up, focusing on concerns about its humanitarian record that Mr. Trump usually overlooked.In March, the Biden administration placed sanctions on top Chinese officials as part of an effort with Britain, Canada and the European Union to punish Beijing for human rights abuses against the largely Muslim Uyghur minority group.In June, the White House took steps to crack down on forced labor in the supply chain for solar panels in the Chinese region of Xinjiang, including a ban on imports from a silicon producer there. It also set aside a dispute with Europe over aircraft subsidies for Boeing and Airbus in June so that the United States could more effectively corral allies to counter China’s ambitions to dominate key industries.China has also been accelerating the pace of “decoupling” from the United States, directing its technology companies to avoid initial public offerings in the United States and list in Hong Kong instead. That has been a big blow to Wall Street firms that have reaped large advisory fees from Chinese companies listing their shares in the United States.Katherine Tai, the U.S. trade representative, has said little so far about the Phase 1 agreement, preferring to emphasize that the administration is still developing its policy toward China.Pete Marovich for The New York TimesThe Treasury Department, with its close ties to Wall Street, has long been much more wary of antagonizing China than the Office of the United States Trade Representative, a separate cabinet agency that oversees trade policy. Katherine Tai, Mr. Biden’s trade representative, has said little so far about the Phase 1 agreement, preferring to emphasize instead that the administration is still developing its policy toward China.Ms. Yellen’s official meetings with her Chinese counterparts have so far been sparse. The Treasury Department announced last month that she had held a virtual call with Liu He, China’s vice premier. They discussed the economic recovery and areas of cooperation, and Ms. Yellen raised concerns about China’s human rights record.She expressed those concerns publicly during a speech in Brussels this week, telling European finance ministers that they should work together to counter “China’s unfair economic practices, malign behavior and human rights abuses.”The comment made waves within the Chinese government. A spokesman for China’s Ministry of Foreign Affairs, Zhao Lijian, said that “China categorically rejects” Ms. Yellen’s remarks and described them as a smear.The Biden administration has won praise for maintaining a hawkish stance toward China without the provocative approach of the Trump administration, which destabilized the global economy with tariffs and a trade war.“Joe Biden has done what he said he would do — he has collected the allies and got them aligned in a similar manner on similar issues in a way that greatly strengthens America’s position vis a vis China,” said Craig Allen, president of the US-China Business Council.Michael Pillsbury, the Hudson Institute scholar who was one of Mr. Trump’s top China advisers, said the Biden administration’s approach to China was shaping up to be tougher and “more effective” than Mr. Trump’s because Mr. Biden’s aides were united in their view that the United States cannot successfully confront China alone.The big question is what comes next.Mr. Bown, of the Peterson Institute, said the Biden administration’s review of the China trade policy was taking so long most likely because the Trump administration had made so many sweeping and sometimes conflicting actions that it was a complicated portfolio to inherit. There are also complex political calculations to be made when it comes to removing the tariffs.“It’s politically toxic to be seen to be weak on China, so you’re going to need to have your ducks in a row in terms of your economic arguments,” Mr. Bown said.Despite the recent animosity, the United States was able to help coax China into joining the global tax agreement that Ms. Yellen has been helping to broker. The Biden administration believes that China wants to be part of the multilateral system and that fully severing ties between the two countries would not be healthy for the global economy.“I think we should maintain economic integration in terms of trade and capital flows and technology where we can,” Ms. Yellen said, adding that the relationship must balance security requirements. “Clearly, national security considerations have to be very carefully evaluated and we may have to take actions where, when it comes to Chinese investment in the United States or other supply chain issues, where we really see a national security need.”Alan Rappeport reported from Washington, and Keith Bradsher from Beijing. More

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    Yellen Makes Case for Ireland to Join Global Tax Deal

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    The Treasury secretary was in Europe to gather support for the tax plan, an agreement that gained the support of the Group of 20 nations on Saturday.BRUSSELS — The United States is hopeful that Ireland will drop its resistance to joining the global tax agreement that it is brokering, as Treasury Secretary Janet L. Yellen made the case to her Irish counterpart this week that it is in its economic interests to join the deal.During a weeklong trip to Europe, Ms. Yellen worked to gather more support for a global plan that is intended to put an end to tax havens and curb profit shifting with a new global minimum tax. The agreement, which gained the support of the Group of 20 nations on Saturday, would usher in a global minimum tax of at least 15 percent. It would also change how taxing rights were allocated, allowing countries to collect levies from large, profitable multinational firms based on where their goods and services were sold.“For Ireland, low taxes has been an economic strategy that has been incredibly successful,” Ms. Yellen said in an interview on Tuesday ahead of her return to Washington. “They see it as very vital to their economic success. And I think to go along with it, probably they need to be able to make the case that it’s in the interest of the country.”Ms. Yellen held high-stakes meetings in Brussels this week with Paschal Donohoe, Ireland’s finance minister and president of the Eurogroup, a club of European finance ministers. She needs Mr. Donohoe’s support because the European Union requires unanimity among its members to formally join the deal, which will require changes to domestic tax laws.After meeting with Ms. Yellen on Monday, Mr. Donohoe struck a positive tone and said he would continue to engage in the process.Despite growing global support for the deal, much work remains to be done.More than 130 countries have backed a framework of the global agreement, which would be the largest shake-up of the international tax system in decades, but important holdouts like Ireland, Hungary and Estonia remain. With stops in Venice and Brussels on her first trip to Europe as Treasury secretary, Ms. Yellen worked with her counterparts to develop a strategy for getting those countries to drop their concerns and join the agreement so that a final pact can be secured by October.Ms. Yellen told her Irish counterpart that Ireland’s economic model would not be upended if it increased its tax rate from 12.5 percent, noting that it would still have a large gap between its rate and the 21 percent tax rate on foreign earnings that the Biden administration has proposed.The Biden administration believes that the agreement, if enacted, will end the “race to the bottom” on corporate taxation, heralding a new era of corporate governance that will help nations finance new infrastructure investments and reduce inequality. Greater tax fairness could also aid in pushing back against the rise of right-wing populists, who have come to power around the world on a wave of frustration that working-class citizens have been forgotten by the elites.“Globalization is not just serving to enrich the rich further and harm the poor,” Ms. Yellen said. “In some broader sense the international tax piece is about that.”Top economic officials are working out complicated details of the global tax plan and will be scrambling to finish them in the coming months. One thorny issue that emerged at the G20 meetings in Venice last weekend was how tax revenue will be allocated around the world as part of a new tax on the largest and most profitable companies.Selling the agreement in the United States could be the biggest challenge. Congress is narrowly divided, and Republicans have been adamant that they will not support tax increases, giving the Biden administration a narrow margin for success even if it is able to pass most of its proposed tax changes with only votes from Democrats.Republican lawmakers have complained that the United States is “surrendering” its tax base by allowing other countries to impose new levies on its companies. For instance, in some cases, China will be able to collect new tax revenue from American businesses that sell products there. However, the United States will probably be able to collect taxes from some Chinese companies that do business in the United States. It is not clear if China would have a net gain from that part of the deal.Ms. Yellen portrayed the global tax as part of a broader economic reckoning that the Biden administration believes needs to happen in order to prepare the United States — and the rest of the world — for future fiscal needs.She pointed to the Biden administration’s tax plans, which include raising the corporate tax rate to 28 percent from 21 percent, as central to that approach, saying the administration wants to address what she considers to be the unfairness of the tax code in the United States.“It just isn’t right for very successful companies to be able to avoid paying their fair share to support expenditures that we need to invest in our economy, to invest in our work force, in R.&D. and a social safety net that’s operational,” Ms. Yellen said.Yet resistance is mounting from corporate America, with business groups warning that the possibility of $2 trillion in corporate tax increases would make American companies less competitive around the world. And with rising prices continuing to be a concern among policymakers in the United States, business interests have said the tax increases could fuel inflation, as companies pass them on to consumers.Ms. Yellen dismissed that theory, arguing that most of the economic research has found that corporate tax increases mostly fall on past investments and would not harm workers or lead to prices rising faster.“There’s no reason to think that changing corporate taxes would have some direct impact on prices,” Ms. Yellen said. More

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    E.U. Delays Digital Levy as Tax Talks Proceed

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    The postponement came as Treasury Secretary Janet Yellen arrived in Brussels to continue pushing for a global minimum tax.BRUSSELS — The United States secured a diplomatic victory in Europe on Monday when European Union officials agreed to postpone their proposal for a digital levy that threatened to derail a global effort to crack down on tax havens.The delay removes another potential obstacle to the broader tax agreement, which gained momentum over the weekend after finance ministers from the Group of 20 countries formally backed a new framework. That deal, which officials hope to make final by October, would usher in a global minimum tax of at least 15 percent and allow countries to tax large, profitable companies based on where their goods and services are sold. If enacted, the changes would entail the biggest overhaul of the international tax system in a century.With those negotiations in their final stretch, the European Union was planning to propose a 0.3 percent tax on the goods and services sold online by all companies operating in the European Union with annual sales of at least 50 million euros. That was intended to help fortify a fiscal recovery fund and had been in development since last year, when the international talks taking place at the Organization for Economic Cooperation and Development appeared to be on life support.But that new levy had been unacceptable to U.S. officials, who viewed it as disproportionately hitting American firms. As Treasury Secretary Janet L. Yellen arrived in Brussels to pressure the European Union to drop or delay the plan, officials announced on Monday that it would be shelved.“I think we will work together to reach this global agreement,” Paolo Gentiloni, European commissioner for economy, told reporters after a meeting with Ms. Yellen. “In this framework I informed Secretary Yellen of our decision to put on hold the proposal of the commission of a digital levy to allow to us to concentrate, working hand in hand to achieve the last mile of this historic agreement.”A European Commission spokesman suggested that the delay would remain in place until October, a time frame that is in line with the deadline set by the O.E.C.D. to complete a global tax agreement.Ahead of a meeting with the Eurogroup, a club of euro-area finance ministers, Ms. Yellen had waved off questions about the significance of the digital levy delay. A Treasury Department spokeswoman said she had no comment.At a news conference in Venice on Sunday, Ms. Yellen made clear that she believed that the new E.U. proposal ran counter to the broader talks over a minimum tax and the elimination of digital services taxes in Europe and other countries.“It’s really up to the European Commission and the members of the European Union to decide how to proceed, but those countries have agreed to avoid putting in place in the future and to dismantle taxes that are discriminatory against U.S. firms,” Ms. Yellen said.Other finance ministers indicated that the delay was another sign of progress.“It’s very, very good that we are now going to the next step, discussing how we will implement this at the European Union and that the European Union is deciding not to go with its own proposal to the public today,” Olaf Scholz, Germany’s finance minister, said as he entered the meeting.The E.U. digital levy proposal faced a difficult path to becoming law in Europe, but the prospect of a new proposal that could be construed as a tax that targets American companies would have been another distraction for the fragile negotiations.The United States has already been angered by other digital taxes that countries like France, Italy and Britain have enacted, which are separate from the new proposal. More than a dozen countries have enacted or announced plans in recent years to move forward with their own digital taxes.The Biden administration has asked countries to immediately drop their digital taxes and has prepared retaliatory tariffs on a wide swath of European goods, including cheese, wine and clothing. As part of the global tax negotiations, countries have said they are willing to do so in exchange for additional tax on the largest and most profitable multinational enterprises, those with profit margins of at least 10 percent, that would be based on where their goods or services were sold, even if they had no physical presence there.France, Europe’s biggest proponent of a digital tax, had no comment Monday. Its finance minister, Bruno Le Maire, had said during the weekend that France would legally commit to withdrawing its digital services tax only after an agreement was in effect, which is unlikely to happen before 2023.In remarks at the meeting on Monday, Ms. Yellen emphasized the importance of a close relationship between the United States and the European Union and underscored the importance of the global tax agreement that she has been helping to broker. She argued that a deal over a global minimum tax would help European nations make important investments in their economies and reduce inequality.“Long-run fiscal sustainability is critically important, which is one of the reasons why we need to continue working collectively to implement a global minimum tax of at least 15 percent, in line with the commitment the G20 made just days ago,” Ms. Yellen said. “We hope all E.U. member states will join the consensus and the European Union will move forward on this issue at E.U. level.”Ms. Yellen made the case that fiscal sustainability should be achieved by taxing multinational companies, adding: “We need sustainable sources of revenue that do not rely on further taxing workers’ wages and exacerbating the economic disparities that we are all committed to reducing.”The meeting also offered Ms. Yellen an opportunity to persuade Ireland to join the global agreement. Ireland, Estonia and Hungary have yet to sign on to the deal, which is now backed by 132 countries. Because support must be unanimous within the European Union, their resistance could scuttle the entire agreement.The United States has been trying to make the case to Ireland that the proposed tax changes in the United States that aim to curb profit shifting would nullify many of the benefits Ireland had gained from having a tax rate of just 12.5 percent. They are also trying to convince Ireland that its status as a corporate hub would be secure even if it raised its tax rate, hoping to alleviate Irish concerns that joining the agreement would upend its economic model.O.E.C.D. officials believe that Ireland is withholding its support for the agreement until the Biden administration demonstrates that it can pass tax legislation in the United States. Ms. Yellen will return to Washington on Tuesday and work with members of Congress to win support for the deal.After a meeting with Ms. Yellen, Paschal Donohoe, Ireland’s finance minister and president of the Eurogroup, offered an optimistic tone but made no commitments. He said that he had a “very good engagement” with the Treasury secretary and that there was “further work ahead.”“I affirmed to Secretary Yellen that Ireland remains very committed to the process,” Mr. Donohoe said, promising that he would remain “constructively engaged.”Liz Alderman More